CIL Board To Discuss New Fuel Supply Pact Next Week

3/23/2012 2:41 AM ET

The board of Coal India Ltd., or CIL, on Thursday had detailed discussions about the modifications needed in clauses of fuel supply agreement or FSA, on the back of the Prime Minister's Office or PMO asking it to ensure adequate fuel to the power sector, reports said.

"The day-long meeting of the board of directors of CIL discussed at length about the modifications in the clauses of the fuel supply agreement (FSA)," sources close to the development said, adding that as FSA was complex in nature, some of the clauses would be further deliberated by the board next week,

However, they refused to comment on the clauses to be modified.

The PMO last month had directed CIL to sign FSAs for full quantity of coal mentioned in the Letters of Assurance (LoAs) for a period of 20 years before March-end for power plants that have been commissioned on or before December 31, 2011.

It said if the supply was below 80 percent, then CIL would be penalized and would be provided incentives if it is above 90 percent.

In case, CIL is unable to meet the obligations, the company would have to arrange for fuel through imports or other arrangements, it added.